Jonathan Rivera Weighs in on Climate Change Presentation

June 7, 2022

Our own Jonathan Rivera weighs in on the maelstrom caused by HSBC banker Stuart Kirk’s controversial presentation on climate change.

“I like what Stuart Kirk says about the potential opportunities that will arise from the transition to green energy, as well as increased efficiencies. However, I think he gets two things wrong: he doesn’t understand the acceleration of carbon emissions over the past 50 years; and the need to devote resources to understanding both long term risks as well as the problems of the present. While he’s correct that, over the long term, the S&P has steadily increased since the 1930s throughout several major crises, there has never been more carbon in the atmosphere throughout the history of civilization, and the emissions keep accelerating. During the 60s C02 ppm increased by 2.7%, while during the 2010s CO2 ppm increased by 6.2%.  Humans are very adaptive, but that adaptation will need to accelerate to keep up with the acceleration of carbon emissions and resulting increases in extreme weather events. In addition, while the immediate risks of inflation, the pandemic, and geopolitical conflict need to be addressed, it doesn’t mean that investors can’t also stay focused on the long term risks of climate change. That would be like canceling a major capital project to deal with a leaky faucet. Stuart mentions climate risk projections that are not until 20 to 30 years out, but for some investments, such as commercial real estate, the horizon is 10 years with an additional assumed 10 years at the time of reversion. Also, Amsterdam was built over centuries during a time of relative sea level stability. Miami was built in one century, and its most expensive real estate is literally on the edge of a measurably rising sea. It’s unfortunate that Stuart has been suspended because climate change deniers will cling to this story as evidence that alternate views are being silenced. Overall, I think he’s right about the significant opportunities that will arise out of the transition away from fossil fuels, as well as the efforts to adapt to a changing climate. I just hope that these factors will outpace the inevitable losses that will result from increases in extreme weather events.”